A handful of small Maine Internet service providers have lost their bid to become full intervenors in a case filed by telecommunications giant Verizon against the Maine Public Utilities Commission.

Verizon has filed suit against MPUC in federal court, claiming rulings by the state agency conflict with policy recently set by the Federal Communications Commission under terms of the Telecommunications Act of 1996.

Federal policy does not require Verizon to provide its competitors with wholesale access to its digital subscriber line network, according to the telecommunications company. Though MPUC has issued two orders, one in September 2004 and another this past March, that indicate Verizon has to let competitors in Maine use its DSL networks, the more recent federal rulings should pre-empt the state policy, Verizon claims.

Biddeford Internet Corp., Skowhegan Online Inc., and Cornerstone Communications of Charleston all have mandated contracts with Verizon that allow them to use Verizon’s infrastructure at wholesale rates. The three ISPs sought intervenor status in the case because of the direct economic effect a court ruling in the matter could have on their business operations, according to documents filed in federal court.

U.S. District Court Judge George Z. Singal ordered last week that the smaller companies cannot have intervenor status in the case because there is no evidence that MPUC is not adequately representing their interests in the matter. Singal ruled that the companies can take part in the case to a limited degree but that they cannot participate as if they themselves were being sued.

They cannot call witnesses, cross-examine witnesses or conduct their own discovery in the case, the judge decided.

Trina Bragdon, staff attorney with MPUC, said Monday that in 2002 Verizon agreed with the state agency to allow competing Internet service providers in Maine to use Verizon’s DSL network. That agreement is not superceded by any federal ruling and remains in effect, she said.

“We’re enforcing that agreement,” Bragdon said.

Peter Reilly, Verizon’s spokesman in Maine, said Monday that the FCC rulings supercede the state’s policy.

“What MPUC has done is issue orders contrary to rulings issued by the Federal Communications Commission,” Reilly said.

He said Verizon agrees with Singal’s decision not to grant intervenor status to the three ISP companies.

According to Bragdon, MPUC supported the Internet companies’ request for intervenor status. Singal’s decision to let them take part on a more limited basis, however, should not be seen as a setback for the state’s case, she said.

“We don’t think it’s going to be detrimental in any way,” the state attorney said. “We feel good that the judge is going to hear these voices” of the small-business interests.

The next development in the legal dispute is likely to take shape sometime next month, according to Bragdon. She said MPUC is expected to issue in August a more specific ruling about what parts of its infrastructure Verizon must share with its competitors.